Banks under fire over charges

The European Commission has launched an attempt to force banks to cut huge customer charges for moving money around the EU.

Single Market Commissioner Frits Bolkestein has announced plans for new EU laws to limit transfer costs, which are expected to be formally endorsed by EU Commissioners tomorrow.

But the European Banking Federation has already signalled it will fight to stop the new legislation.

Mr Bolkestein says: "I do not expect banks to like this new proposal. But my patience is exhausted - the banks have had their chances, but they have not delivered on their promises."

He says: "Customers and small businesses in particular are paying through the nose to transfer their money, and this has become a constant irritant.

"Banks have been asked for 11 years to cut charges and they are still too high. They have said they will do something and they have not."

The cost of moving 100 euro - about £60 - from one EU country to another has fallen by only 20p, still leaving an average of £10.40 to pay. This compares with less than 60p for a similar transfer between banks in the same country.

Now the Commission is proposing a ban on all EU banks - in and outside the euro-zone - from levying differing charges for cross-border payments in euros.

Eurocrats want EU governments to impose the ban from the start of next year, when euro notes and coins finally come on stream.

The ban would not technically apply to transfers in sterling, but the Commission hopes and expects that its new move will encourage the trade in euros. A spokesman says: "Obviously, bank customers moving money from, say the UK to Belgium, will find themselves better off if they conduct the transaction in euros in future."